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Mt. Gox Begins Reimbursing Bitcoin to Creditors a Decade After Collapse
- The trustee of Mt. Gox, the Japanese bitcoin exchange that collapsed a decade ago, said Friday that the company has begun making payments in bitcoin and bitcoin cash to some of its creditors.
- The announcement goes on to say that refunds to other users of the hacked exchange will be “provided promptly” once certain conditions are met.
- Customers of the Tokyo-based exchange have been waiting for 10 long years to get their money back.
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The Trustee of Mount Gox, the Japanese Bitcoin stock market that collapsed into bankruptcy a decade ago, said on Friday The company has started making payments in bitcoin and bitcoin cash to some of its creditors.
The announcement added that refunds to other users of the hacked exchange would be “provided in a timely manner” if they met certain conditions, including verifying their accounts and signing up for one of the designated digital asset exchanges through which the bankruptcy estate is facilitating disbursements of digital tokens.
“We ask creditors eligible for rehabilitation to wait a little longer,” the statement continued.
The price of bitcoin has dropped nearly 6% in the last 24 hours.
Customers of the Tokyo-based exchange have been waiting 10 years to get their money back.
Once the world’s largest cryptocurrency exchange, Mt. Gox filed for bankruptcy in February 2014 after a series of robberies that took away up to 950,000 bitcoins, worth more than $58 billion at today’s prices.
Mt. Gox attributed the disappearance of bitcoin to a bug in the cryptocurrency’s framework. While users were receiving incomplete transaction messages when logging into the exchange, the coins may have actually been illicitly moved by hackers from their accounts, Mt. Gox said.
After filing for bankruptcy, 140,000 missing bitcoins were recovered, meaning that about $9 billion in bitcoin will be returned to its owners, at today’s prices. At the time of the bankruptcy, bitcoin was trading at around $600. Today, it is worth more than $54,000, an increase of nearly 9,000%.
According to data from Arkham Intelligence, Mt. Gox moved billions of dollars in bitcoin from its crypto wallets on Thursday and Friday ahead of the redemption notice.
More than 47,000 bitcoins worth $2.7 billion were moved from an offline cryptocurrency wallet associated with Mt. Gox, Arkham Intelligence said Friday.
Some of the funds, worth $84.9 million, were sent to Japanese cryptocurrency exchange Bitbank, which is listed as a platform that supports refunds to Mt. Gox users, according to Arkham Intelligence. Another $63.6 million worth of bitcoin was sent to an unknown party, which Arkham Intelligence said was “likely a listed refund exchange.”
According to Arkham Intelligence, Mt. Gox wallets still hold 138,985 bitcoins, worth about $7.5 billion at current prices, meaning billions of dollars worth of cryptocurrency still need to be paid out.
Analysts had previously told CNBC that Expect Mt. Gox refund plan to lead to major bitcoin sell-offalthough this is likely to be short-lived and precedes further price increases later this year and into early 2025.
John Glover, chief investment officer at cryptocurrency lending firm Ledn, told CNBC that the windfall for Mt. Gox users would likely translate into massive sell-offs of bitcoin as investors look to lock in gains.
“Many will clearly cash in and revel in the fact that having their assets tied up in the Mt. Gox bust was the best investment they ever made,” said Glover, who was previously a Barclays CEO. “Some will clearly choose to take the money and run,” he said in emailed comments.
JPMorgan analysts said in a note last month that they expect Mt. Gox customers to sell some of their bitcoin to profit from the cryptocurrency’s seismic gains.
“Assuming that most of the liquidations by Mt. Gox creditors occur in July, [this] “creates a trajectory where cryptocurrency prices experience… pressure in July, but begin to recover from August onwards,” they wrote.
Ultimately, the total amount owed to creditors, or about 140,000 bitcoins, represents about 0.7% of the 19.7 million bitcoins currently in circulation.
Analysts say this means that while it is likely to impact prices, there is enough liquidity available to cushion the blow of any sharp sell-off.
James Butterfill, head of research at CoinShares, told CNBC that the billions of dollars in bitcoin traded each day this year on reputable exchanges suggests that “there is sufficient liquidity to absorb these sell-offs during the summer months.”
Jacob Joseph, research analyst at CCData, echoed this sentiment, saying that markets are more than capable of absorbing the selling pressure.
“Furthermore, a good portion of lenders are likely to take a 10% haircut on their securities to receive early repayment, and not all securities are set to be liquidated on the open market, reducing overall selling pressure,” he told CNBC via email.